Nordic politics, Nordic enterprise, and why there&rsquo;s a hint of Thatcher in the midst of it all

A recent article in The Economist heralds the Nordic countries as "the next supermodel," praising progressive forms of government - exempt from the dogmatic shackles of right and left - for delivering economic prosperity. PEX contributor Sam Miranda asks whether the innovation culture present in Nordic politics can be found in enterprise, and if there’s a hint of Thatcher in the midst of it all…

The death of Margaret Thatcher has reverberated across the world. Argentinian and Irish sentiment aside, the foreign response to her legacy has been largely positive. There have been eulogies from her American and Polish acolytes, and even those ideologically discordant with her policies – France’s President Francois Hollande and the African National Congress - have acknowledged her gallantry as a reformist stateswoman.

But what of the response from the Nordic countries? A series of features in The Economist have highlighted the hallmarks of Thatcherism in Nordic politics. To set the scene, Thatcher was a staunch advocate of Milton Friedman’s neoliberal free market economics, and her divisive tenure was characterised by privatisation, rigorous control of inflation and cuts to public spending. Her transformation of Britain was chequered by the reduction of Britain’s manufacturing industries, militant suppression of the trade unions, unemployment and social inequality.

The Nordic answer to the Iron Lady?

Elements of Thatcherism shine brighter than the aurora borealis on the Nordic landscape. The states have responded to a debt crisis in the mid 90s with a new sheen of fiscal responsibility. Sweden has made the most concerted efforts, reducing public spending as a percentage of GDP from 55% in 2000, to 49% in 2013, and ensuring an annual growth rate of 2.2% over the past decade. Sweden, Denmark, Norway and Finland boast positive GDP growth rates, AAA credit ratings (Iceland is the anomaly), and gross government debt levels well below those of the U.S. and European Union.

But the similarities in politics stop there. Whereas Thatcher’s detractors accuse her of planning to dismantle the welfare state, savaging the public sector and polarising the social classes, the Nordic states retain comprehensive welfare programmes and diverse and enfranchised labour markets.

As The Economist asserts, they prove that it is "possible to combine competitive capitalism with a large state by employing 30% of their workforce in the public sector, compared with an OECD average of 15%. The Nordics are coming up with highly innovative solutions that reject the tired orthodoxies of the left and right."

That’s not to say the social and political landscape is without its blemishes – the threat of immigration to cultural homogeneity divides opinion, and the middle class is becoming increasingly disgruntled with stringent taxation.

The links between Thatcherism and the whole spectrum of Nordic politics may, therefore, be tenuous, but there is more common ground when it comes to views on enterprise. Less so in the balance between privatisation and nationalisation – although Sweden’s government has invited private companies to compete in education and for state-funded health services – but more in ethos.

Thatcher embraced new technology, globalisation, and competition – three fundamental cogs in the Nordic business paradigm. The decline of business heavyweights such as Nokia and Saab are often met with bewilderment on British shores. But we shouldn’t be so surprised. As Daniel Sachs, CEO of Stockholm-based Proventus AB explains, "The Nordic model leads to one great benefit: It promotes adaptability and openness to change. Openness to change is a core aspect of the competitiveness of the Nordic economies. Structural change is rapid, industries and companies decline and new ones emerge and people lose their jobs."

Firms such as Nokia have fallen victim to this organic enterprise cycle. Once the monolith of mobile communications – Snake on the 3210 evokes plenty of personal nostalgia – the company missed out on the smartphone holy grail, and having cut a fifth of its workforce since 2010, the future looks bleak.

But, and this is where the first of the three cogs comes in, there are new technology powers emerging.

The region has taken the apps market by storm. Rovio Entertainment’s Angry Birds is a global phenomenon, and just last month, the top three highest grossing mobile apps on the U.S. iPad stemmed from the Nordics. Due to favourable energy costs, infrastructure, climate and levels of regulation, the region is also becoming a hub for data centres. Google has developed a new facility in Hamina, Finland, and Lulea, Sweden has been chosen as the location for Facebook’s new compound because of its access to renewable energy. And if technology is the fraction, innovation is the common denominator in Nordic enterprise. Agriculture and manufacturing industries – ailing in countries such as Britain – have been revitalised by firms such as Danish based KJ industries, who have programmed cutting machines with the aid of X-rays to carve up cattle.

Nordic companies have adapted well to globalisation and its trade friendly parameters by becoming niche operators and thriving on exports. They may not be the most glamorous of products, but Finland’s Kone is an international leader in lift and escalator mechanisms, Denmark’s Oticon is the chief supplier of hearing aids, and Sweden’s Sandvik boasts the world’s fastest drill. But with globalisation, comes competition.

Some have succumbed, most notably Ericsson who have withdrawn from the cellular device market to focus on telecommunications networks, Volvo who have been subsumed by Chinese firm Geely, and Saab – who suffered the ignominy of bankruptcy in April 2012.

Not all the goliaths, however, have fallen foul of the competition. Pharmaceutical company Novo Nordisk is in pole position to respond to the diabetes epidemic as the world’s largest producer of insulin, increasing operating profit by 32% last year. The most contentious response to competition is offshoring, which mitigates costs but ostracises the domestic labour market. Ericsson, for instance, have cut its Swedish labour force from 31,000 to 18,000, capitalising on low production costs in the Baltic states, China and India.

Whether the Nordic model can be emulated given the region’s cultural idiosyncrasies, geographical differences and demographics (the combined population is a mere 26 million) is a debate for another day. What we can say, is that the ghost of Thatcherism looms over Nordic politics and enterprise. It’s just that the Nordics are doing it better.

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